Can I Invest My Super In Property?


When it comes to securing your financial future and securing a comfortable retirement, superannuation is a key tool. While some superannuation funds are traditionally invested in stocks, bonds and managed funds, many wonder if it's possible to diversify further by investing in property. In this article, we'll explore the process of investing your super in property and have a look at the possibilities and challenges involved. 


Understanding Superannuation

Superannuation is a cornerstone of Australia's retirement system. It's a compulsory savings mechanism where employers contribute a percentage of an employee's salary into a super fund. This fund grows over time with the aim to provide financial stability during retirement.

Investing In Property Through Your Super

Yes, it is possible to invest in property using your superannuation funds. This can be done through a Self-Managed Superannuation Fund (SMSF). An SMSF allows you more control over how your superannuation is invested and allows the possibility of investing in residential or commercial property. 


Benefits Of Property Investment Using Your Super


Investing in property is a great way to provide diversification to your portfolio. It's a tangible asset that behaves differently from traditional investment options like stocks and bonds. This can potentially reduce the overall risk for your investments.

Potential For Rental Income

Investing in property can offer consistent rental income which can supplement your superannuation savings and retirement income.

Capital Appreciation

Property has the potential to appreciate in value over time. If the property market performs well, your investment could grow significantly and enhance your retirement savings.

Control And Flexibility

With an SMSF, you have more control over your investment decisions. This appeals to those who have a good understanding of the property market and want to tailor their investments to their preferences.


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Challenges And Considerations

Regulations And Compliance

Investing in property through an SMSF comes with strict regulations and compliance requirements that are set by the Australian Taxation Office (ATO). Failing to adhere to these rules can result in penalties and even the loss of the fund's concessional tax status.


Acquiring property through an SMSF involves costs such as legal fees, property management fees and potential borrowing costs if you need a loan to buy the property. These costs can negatively impact your returns.


Property is considered illiquid, meaning it's not easily converted into cash. This can be a concern if you need access to your super funds in a hurry.

Market Downturns

While property has the potential to appreciate, it can be affected by market downturns. Economic fluctuations can impact property prices and rental demand.


How To Invest In Property With Your Super

Establish An SMSF

If you don't already have an SMSF, you'll need to set one up. This involves legal and administrative steps. It's recommended to seek professional advice to ensure you understand your responsibilities.

Develop An Investment Strategy

Your SMSF needs a clear investment strategy that outlines your risk tolerance, financial goals and how property fits into your overall portfolio.


If you need to borrow to purchase the property, your SMSF can apply for a limited recourse borrowing arrangement (LRBA). This allows the SMSF to borrow money for property investment under specific conditions.


Once your SMSF is ready, you can use the funds to purchase the property. The property must be acquired at market value and for the purpose of providing retirement benefits to the members.


Managing the property, including maintenance and tenant-related matters, must be handled by the SMSF. Rental income generated goes directly into your SMSF.


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Investing your super in property offers potential benefits such as diversification, rental income and capital appreciation. However, it's essential to be aware of the challenges, compliance requirements and costs involved. 

The decision to invest in property through your super should be made with a solid understanding of your financial situation, goals and risk tolerance. With professional guidance and due diligence, property can be a valuable addition to your superannuation investment plans. 


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Published on 25th of August 2023 by Davina Deluao
Davina Deluao
Davina Deluao

Davina graduated from Swinburne University in 2018 with a Bachelor of Arts, majoring in Journalism. Through travelling and studying abroad in NYC and LA, her interests in property and design grew and became a strong pursuit. Davina has been writing for iBuildNew Group since 2019.


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